It’s a pretty basic fact in employment law — an employee who quits is not entitled to severance pay. But what constitutes quitting is often open to debate, as an employee doesn’t actually have to say “I quit” in order to resign.
Danroth v. Farrow Holdings Ltd.
, a recent decision of the British Columbia Supreme Court, the court held an employee who thought he had been constructively dismissed or fired had actually resigned from his job.
Ronald Danroth worked as a carpet cleaner for Farrow Holdings for seven years. Farrow Holdings provides cleaning and janitorial services in and around the community of Smithers, B.C.
The employment relationship between Danroth and his employer appeared generally satisfactory, the court said. Danroth attended several employment-related courses at Farrow Holdings’ expense and the company scheduled Danroth for overtime work, something he wanted.
But in early December 2003 Danroth became upset over a reduction in his overtime hours. Later that month a more junior employee was assigned work that Danroth felt he should have received. His last two days of work before the holidays were Dec. 22 and Dec. 23 and he was scheduled to return on Feb. 5, 2004.
The employee’s evidence
When he picked up his pay on Dec. 31, 2003, he found he had not been paid for Dec. 22 and Dec. 23. He immediately phoned Cress Farrow, a principal of Farrow Holdings. In his affidavit, Danroth said he “… told Mr. Farrow that because he was denying me work, not paying me for time I had worked and because I felt he was harassing me, that he was constructively dismissing me and I hung up the phone.”
On Jan. 2, 2004, Danroth said he went to one of the company’s worksites to talk to Farrow. But before he could say anything, he said Farrow told him he had been fired and that he could pick up his severance cheque on Jan. 5. Danroth said when he picked up the cheque, it only contained his unpaid wages.
The employer’s evidence
In his affidavit, Farrow said the reason the Dec. 31 pay did not include payment for Dec. 22 and Dec. 23 was because Danroth did not comply with a requirement around employee worksheets. Despite more than one request, Danroth had not complied with the employer’s policy.
Farrow said Danroth indicated during the Dec. 31 telephone conversation that the failure to include payment for all time worked constituted constructive dismissal, and Danroth said: “You owe me 12 hours pay plus my holiday pay and you now owe me seven weeks’ severance pay.” Based on this, Farrow understood that Danroth had quit.
Employee didn’t mean to quit
In an affidavit in response to Farrow’s, Danforth said he did not, on Dec. 31 or at any time after, intend to resign from his job.
But he acknowledged that on Jan. 2, when he attended one of the worksites to talk to his boss, that Farrow never expressly said Danforth had been fired. He was told that he didn’t work for Farrow Holdings anymore and that he should leave the building and pick up his severance cheque. He took this to mean that he had been fired.
What the court said
When the trial started, Danroth dropped his claim for constructive dismissal. The matter before the court, then, was whether or not Danroth resigned from his employment on Dec. 31, 2003, or was fired on Jan. 2, 2004.
The court said there is a simple test in determining if someone quit: Given all the surrounding circumstances, would a reasonable person have understood by Danroth’s statement that he had just resigned?
Danroth said he never said “I quit.” Farrow never claimed that Danroth used those words. But Farrow understood from the Dec. 31 conversation that Danroth had quit. This was based on Danroth having told him that he had been constructively dismissed and his assertion of an entitlement to severance pay.
Farrow argued that given Danroth’s reference to constructive dismissal, and his demand for severance pay, that a reasonable person would understand that he had resigned.
Danroth’s counsel argued this was not sufficiently clear to be understood as a resignation. It said the intention to resign must be stated in clear terms.
But the court said an employee doesn’t actually need to say “I quit” or “I resign.” In this case, there was a clear intention to quit. Consider the circumstances:
•Danroth complained about his work schedule;
•he stated his concern over the shortfall in pay;
•he said he considered himself to have been constructively dismissed; and
•he demanded severance pay.
“I conclude that a reasonable person would have understood by his statement, in these circumstances, that he had resigned,” said Justice Harry Slade of the British Columbia Supreme Court.
The court said it’s clear no severance was paid in this case. This did not help Danroth, said Justice Slade.
“Non-payment of severance by (Farrow Holdings) does not counter (the employer’s) belief that Mr. Danroth had resigned, notwithstanding that this belief was, at least in part, based on his demand for severance pay,” said Justice Slade. “Non-payment of severance indicates only that (Farrow Holdings) did not accept that it had constructively dismissed the plaintiff. (Danroth) had, in the view of the defendant, resigned."
For more information see:
Danroth v. Farrow Holdings Ltd.
, 2005 CarswellBC 1013, 2005 BCSC 637 (B.C. S.C.)
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